Correlation Between Jpmorgan Equity and Sextant E

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Equity and Sextant E at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jpmorgan Equity and Sextant E into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jpmorgan Equity Premium and Sextant E Fund, you can compare the effects of market volatilities on Jpmorgan Equity and Sextant E and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jpmorgan Equity with a short position of Sextant E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Equity and Sextant E.

Diversification Opportunities for Jpmorgan Equity and Sextant E

0.69

Correlation Coefficient

Jpmorgan Equity  Sextant E

Poor diversification

The 3 months correlation between Jpmorgan and Sextant is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Equity Premium and Sextant E Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant E Fund and Jpmorgan Equity is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jpmorgan Equity Premium are associated (or correlated) with Sextant E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant E Fund has no effect on the direction of Jpmorgan Equity i.e., Jpmorgan Equity and Sextant E go up and down completely randomly.

Pair Corralation between Jpmorgan Equity and Sextant E

Assuming the 90 days horizon Jpmorgan Equity Premium is expected to generate 1.1 times more return on investment than Sextant E. However, Jpmorgan Equity is 1.1 times more volatile than Sextant E Fund. It trades about 0.14 of its potential returns per unit of risk. Sextant E Fund is currently generating about 0.08 per unit of risk. If you would invest  1,435  in Jpmorgan Equity Premium on September 13, 2024 and sell it today you would earn a total of  48.00  from holding Jpmorgan Equity Premium or generate 3.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Jpmorgan Equity Premium  vs.  Sextant E Fund

Jpmorgan Equity Premium

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Equity Premium are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Jpmorgan Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sextant E Fund

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sextant E Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sextant E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jpmorgan Equity and Sextant E

The main advantage of trading using opposite Jpmorgan Equity and Sextant E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Equity position performs unexpectedly, Sextant E can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sextant E will offset losses from the drop in Sextant E's long position.

The idea behind Jpmorgan Equity Premium and Sextant E Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.